Business Environment

Industrial Climate

Libya has declared that it will focus on encouraging investment in what it deems critical areas. The government is looking at projects such as housing, hospital refurbishment, water treatment, and power and transmission lines. It also wants to upgrade Tripoli airport, construct a railway line to Egypt and Tunisia, and build luxury hotels.

Libya needs to diversify its oil-based economy and reduce inflation and unemployment. The government enacted a 28-point law in 1997 aimed at encouraging foreign capital investment. Serious efforts have begun to attract foreign investment after the United Nations suspended a seven-year embargo on international airline flights and the oil industry on April 5 1999.

The oil industry remains crucial to Libya’s economy and Libya has also launched a program to attract investors to oil exploration and production. New offshore oilfields and associated gas fields as well as non-associated gas fields have been discovered. Extensive offshore exploration by European, Brazilian, and Canadian companies is underway.

Work was started on the construction of an underwater pipeline to Sicily. Tripoli put a new Liquid Natural Gas (LNG) extracting unit with a 3,500 bpd capacity into service late in 1994 on the Bou Attifel gas field.

Libya is North Africa’s biggest oil producer and Europe’s leading North African oil supplier. Supplies for North Africa to European destinations have the advantage of being both timely and cost effective. Over 400,000 b/d of crude are destined for Italy alone. Libya and Algeria together provided the EU with 13.4 million tons of refined products in 1995 or 17.2% of its requirements. In addition to its oil industry, Libya has an active chemicals industry, as well as being one of the larger markets in the African lubricants industry.

The oil industry in Libya remains active, contributing 99% of country’s export revenue. Current reserves are estimated to be 50 billion barrels of crude and 43 trillion cubic feet of natural gas. In 1994, production was 49.2 million tons of crude and 273,000 terajoules of natural gas.

Aims of Government Policy

Economic Development Plans
The government aims to open up the Libyan economy to more industrialization with increased private sector participation and investment of foreign capital. Law No. 9/2010 was enacted to attract the investment of foreign capital. This Law aims at encouraging foreign investment within the framework of the general policy of the State and the objectives of economic and social development, particularly in regard to the transfer of modern technology, to the development of Libyan technical resources, to contribute to the development of national products and to assist in their entry into the international markets.

Regional Industry Development
The government is keen to enhance the regional development in addition to locating industry in different parts of the country. Regional development is one of the stated goals of the Law No. 9 of (2010) previously Law No. 5 of (1997).

Relations with the European Union
Due to old tyrant regime Libya has unable to boost its economic position. Such as, in reaction to Libya being involved in a terrorist attack on a discotheque in Berlin and the bombing of a passenger aircraft over the United Kingdom and threats made by Libyan Tyrant Government against its Member States European Community imposed several sanctions including an embargo on the export of arms and other military equipment to Libya. Such decisions halted country’s economic activities. On 11 October 2004 the EU lifted embargo in response to Libya dismantling its weapons of mass destruction programs.

After 2004, the country started to recover its economic position. Today Much of Libya’s external trade is with countries in Europe such as Italy, France, Germany, Spain and UK.

For example in 1999 British exports to Libya reached at £177.7 million and imports from Libya were £115.9 million. EU is a vital trading partner with Libya accounting for 70% of its entire trade which amounts to roughly €35.5 billion. Such as, in 2010 Libya gained rank number 11 in EU’s imports and ranked number 19 in the EU’s major trade partners. EU goods imports from Libya 2010: €28.8 billion, which were consisted especially of energy (98,5% ), in particular petroleum and petroleum products (88,8% ) amounting to €25.6 billion. EU exports in 2010 to Libya were €6.8 billion which were comprised mainly of machinery and transport equipment (42,4%), agricultural products (11,1%) and other semi-manufactures (6,8%). The EU was Libya’s main source of imports and its largest market for exports in 2010.

The “Free Trade Agreement” between EU and Libya is expected to provide new export opportunities and higher legal predictability for EU exporters, mainly in services and establishment, public procurement and gas and oil markets.

The Arab Maghreb Union
On February 18, 1989, the heads of State of five Maghreb countries, Algeria, Libya, Mauritania, Morocco and Tunisia met in Marrakech (Morocco) to sign a Treaty establishing the Arab Maghreb Union (AMU). On the economic side, the Treaty aims to integrate the economies of the five countries.

It is recognized that special attention must be given to the relationship between the AMU and the European Union in view of the fact that the economies are currently more strongly oriented toward Europe than toward each other, and that the EU may be an important factor in determining the success of Maghreb economic integration.

Labour/Management Relations
Libyan laws restrict the import of human resources to those that are not already available in the Libyan labor market. A limited range of skills are available. All the labor forces are members of unions, however generally the relations between the labor and the foreign employers have been excellent.